Advisor s Edge SM NY Variable Annuity Prospectus May 2013

Transcription

1 Advisor s Edge SM NY Variable Annuity Prospectus May 2013 Advisor s Edge SM NY Variable Annuity Prospectus Annuities issued by: VAENY0513

2 THE ADVISOR S EDGE SM NY VARIABLE ANNUITY Issued Through TFLIC Separate Account VNY By Transamerica Financial Life Insurance Company Prospectus May 1, 2013 The Advisor s Edge SM NY Variable Annuity (the Policy ) provides a means of investing on a tax-deferred basis in a variety of portfolios of underlying mutual funds (the Portfolios ). The Policy is an individual variable annuity policy and is intended for retirement savings or other long-term investment purposes. For investments in the Subaccounts, the Policy Owner ( You, Your ) bears all investment risk (including the possible loss of principal), and investment results are not guaranteed. The Policy provides a Right to Cancel period of at least 20 days during which the Policy may be cancelled. Before investing you should carefully read this prospectus and the accompanying prospectuses for the Portfolios. These prospectuses give you important information about the Policy and the Portfolios, including the objectives, risks, and strategies of the Portfolios; you should keep them for future reference. A Statement of Additional Information ( SAI ) for the Policy prospectus has been filed with the Securities and Exchange Commission, is incorporated by reference, and is available free of charge by calling our Administrative Office at The Table of Contents of the Statement of Additional Information is included at the end of this prospectus. Information about the variable annuity also can be reviewed and copied at the SEC s Public Reference Room in Washington, DC. You may obtain information about the operation of the Public Reference Room by calling the SEC at SEC The SEC also maintains a web site ( that contains the prospectus, the SAI, material incorporated by reference, and other information. This prospectus does not constitute an offering in any jurisdiction where it would be unlawful to make an offering like this. We have not authorized anyone to give any information or make any representations about this offering other than those contained in this prospectus. You should not rely on any other information or representations. Please note that the policies and the separate account investment choices: are not bank deposits are not federally insured are not endorsed by any bank or government agency are not guaranteed to achieve their goal are subject to risks, including loss of premium Neither the Securities and Exchange Commission nor any state securities regulator has approved or disapproved these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

3 The subaccounts available under this policy invest in underlying funds of the Portfolio companies listed below: Columbia Funds Variable Insurance Trust DFA Investment Dimensions Group Inc. Federated Insurance Series Fidelity Variable Insurance Products Fund Transamerica Series Trust Vanguard Variable Insurance Fund Wanger Advisors Trust Wells Fargo Advantage Variable Trust Funds For a complete list of the available subaccounts, please refer to Appendix A: Portfolios Associated with the Subaccounts. For more information on the underlying funds, please refer to the prospectus for the underlying fund. 2

4 Contents 4 Glossary 22 Annuity Payments 5 Summary 25 Death Benefit 9 Fee Table 27 Tax Information 10 Example 35 Additional Features 11 The Annuity Policy 36 Other Information 11 Purchase 40 Table of Contents of Statement of Additional Information 14 Investment Choices 41 Appendix A: Portfolios Associated with the Subaccounts 18 Performance 45 Appendix B (Condensed Financial Information) 19 Expenses 61 Appendix C: Death Benefit - Adjusted Partial Withdrawal 21 Access to Your Money 62 Appendix D: Architect Guaranteed Lifetime Withdrawal Benefit 3

5 GLOSSARY OF TERMS Accumulation Unit An accounting unit of measure used in calculating the policy value in the separate account before the annuity commencement date. Administrative Office Transamerica Financial Life Insurance Company, Variable Annuity Department, 4333 Edgewood Road, N.E., Cedar Rapids, Iowa Annuitant The person during whose life, annuity payments involving life contingencies will continue. Annuity Commencement Date The date upon which annuity payments are to commence. Annuity Payment Option A method of receiving a stream of annuity payments selected by the owner. Beneficiary The person who has the right to the death benefit set forth in the Policy. Business Day A day when the New York Stock Exchange is open for business. Code The Internal Revenue Code of 1986, as amended. Good Order An instruction that TFLIC receives that is sufficiently complete and clear along with all necessary forms, information and supporting legal documentation, including any required spousal or joint owner s consents so that TFLIC does not need to exercise any discretion to follow such instruction. All requests for a partial or full withdrawal, a transfer, a death benefit, or other transaction or change, must be in good order. Nonqualified Policy A Policy other than a qualified policy. Owner (Policy Owner, You, Your) The individual who (or entity that) may exercise all rights and privileges under an individual Policy. Policy The individual Policy. Policy Date The date shown on the policy data page attached to the Policy and the date on which the Policy becomes effective. Policy Value On or before the annuity commencement date, the policy value is equal to the owner s: Premium Payments; minus partial withdrawals; plus or minus accumulated gains or losses in the separate account; minus service charges, premium taxes, if applicable, rider fees, and transfer fees, if any. Policy Year A policy year begins on the policy date and on each anniversary thereof. Premium Payment An amount paid to TFLIC by the Owner or on the Owner s behalf as consideration for the benefits provided by the Policy. Qualified Policy A Policy issued in connection with retirement plans that qualify for special federal income tax treatment under the Code. Separate Account TFLIC Separate Account VNY, a separate account established and registered as a unit investment trust under the Investment Company Act of 1940, as amended (the 1940 Act ), to which Premium Payments under the policies may be allocated. Service Charge An annual charge on each Policy Anniversary for policy maintenance and related administrative expenses. Subaccount A subdivision within the separate account, the assets of which are invested in specified portfolios of the underlying funds. Valuation Period The period of time from one determination of accumulation unit values and annuity unit values to the next subsequent determination of those values. Such determination shall be made on each business day. Variable Annuity Payments Payments made pursuant to an annuity payment option which fluctuates as to dollar amount or payment term in relation to the investment performance of the specified subaccounts within the separate account. Written Notice Written notice that is signed by the owner, is in good order and received at the Administrative Office, and that gives TFLIC the information it requires. For some transactions, TFLIC may accept an electronic notice such as telephone instructions. Such electronic notice must meet the requirements for good order that TFLIC establishes for such notices. 4

6 SUMMARY The numbered sections in this Summary provide you with a concise discussion of the major topics covered in this prospectus. Each section of the Summary is discussed in greater detail in the main body of the prospectus at corresponding numbered headings. Please read the full prospectus carefully. 1. THE ANNUITY POLICY The Advisor s Edge SM NY Variable Annuity Advisor s Edge SM NY is a flexible-premium variable annuity offered by Transamerica Financial Life Insurance Company ( TFLIC, We, Us, Our ). The Policy provides a means of investing on a taxdeferred basis in various Portfolios. Who Should Invest The Policy is intended for long-term investors who want tax-deferred accumulations of funds, generally for retirement but also for other long-term purposes. The Policy provides benefits in two distinct phases: accumulation and income. The Accumulation Phase During the Accumulation Phase, you choose to allocate your investment in the Policy among the various Portfolios available under the Policy. You can contribute additional amounts to the Policy and you can take withdrawals from the Policy during the Accumulation Phase. The value of your investment depends on the investment performance of the Portfolios that you choose. Your earnings are generally not taxed during this phase unless you withdraw them. The Income Phase During the Income Phase, you can receive regular annuity payments on a fixed or variable basis and for various periods of time depending on your need for income and the choices available under the Policy. See Annuity Payments for more information about Annuity Payment Options. 2. PURCHASE You can buy the Policy with a minimum investment of $10,000 for Non-Qualified Policies and $1,000 for 5 Qualified Policies. You must obtain prior company approval to purchase a policy with an amount less than the stated minimum. You can add $500 or more to Non-Qualified Policies and $25 or more to Qualified Policies at any time during the Accumulation Phase. There is generally no minimum initial premium payment for policies issued under section 403(b) of the Internal Revenue Code; however, your premium must be received within 90 days of the policy date or your policy will be canceled. We reserve the right to reject cumulative Premium Payments over $1,000,000 (if riders are attached) and $2,000,000 (if riders are not attached) (this includes subsequent Premium Payments) for policies with the same owner or same annuitant for issue ages For issue ages over 80, we reserve the right to reject cumulative Premium Payments over $500,000 (if riders are attached) and $1,000,000 (if riders are not attached) (this includes subsequent Premium Payments) for policies with the same owner or same annuitant. 3. INVESTMENT CHOICES When you purchase the Policy, your Premium Payments are deposited into the TFLIC Separate Account VNY (the Separate Account ). The Separate Account contains a number of subaccounts that invest exclusively in shares of corresponding Portfolios (the Subaccounts ). The investment performance of each Subaccount is linked directly to the investment performance of one of the Portfolios. Assets in the Separate Account belong to TFLIC, but are accounted for separately from the Company s other assets and can be used only to satisfy its obligations to the Policy Owners. You can allocate your Premium Payments to one of several underlying fund portfolios listed under Investment Choices in this prospectus and described in the underlying fund prospectuses. Depending upon their investment performance, you can make or lose money in any of the subaccounts. We currently allow you to transfer money between any of the investment choices during the accumulation phase. We reserve the right to charge a $10 fee for each transfer in excess of 12 transfers per Policy Year and to impose restrictions and limitations on transfers.

7 4. PERFORMANCE The investment performance of the Subaccounts you choose directly affects the value of your Policy. For investments in the Subaccounts, you bear all investment risk (including the possible loss of principal), and investment results are not guaranteed. From time to time, TFLIC may advertise the investment performance of the Subaccounts. In doing so, it will use standardized methods prescribed by the Securities and Exchange Commission ( SEC ), as well as certain non-standardized methods. Past performance does not indicate or predict future performance. 5. EXPENSES No sales load is deducted from Premium Payments. No surrender charge applies to withdrawals. TFLIC will deduct daily mortality and expense risk fees and administrative charges at an annual rate of either 0.75%, 0.60% or 0.55% from the assets in each Subaccount (depending on the death benefit you select). On each Policy Anniversary during any Policy Year before the Annuity Commencement Date, we reserve the right to assess a service charge of up to $30 for policy administration expenses. In no event will the Service Charge exceed 2% of the Policy Value on the Policy Anniversary. The Service Charge will not be deducted on a Policy Anniversary if at this time, (1) the sum of all Premium Payments less the sum of all withdrawals taken is at least $50,000 or (2) the Policy Value equals or exceeds $50,000. The value of net assets of the Subaccounts will reflect the management fee and other expenses incurred by the Portfolios. 6. ACCESS TO YOUR MONEY You can take money out of your Policy at any time during the Accumulation Phase. Each withdrawal you make must be at least $500. You may have to pay income tax and a tax penalty on any money you take out. Withdrawals may be restricted under Qualified Policies ANNUITY PAYMENTS During the Income Phase, you receive regular annuity payments under a wide range of Annuity Payment Options. The Policy allows you to receive an income guaranteed for as long as you live or until the second of two people dies. You may also choose to receive a guaranteed number of payments over a number of years. Most Annuity Payment Options are available on either a variable basis (where the amount of each payment rises or falls depending on the investment performance of the Portfolios you have chosen) or a fixed basis (where the amount of each payment will remain level). If you select a variable payment option, the dollar amount of your payments may go up or down. 8. DEATH BENEFIT If the annuitant dies before the income phase begins, then a death benefit will become payable. If the owner is not the annuitant, no death benefit is paid if the owner dies; however required distribution rules require that the Policy Value be distributed upon the death of any owner. Naming different persons as owner and annuitant can affect to whom amounts will be paid. Use care when naming owners, annuitants and beneficiaries, and consult your advisor if you have questions. When you purchase a policy, you may choose an optional Guaranteed Minimum Death Benefit for an additional fee: Return of Premium Annual Step-Up to age 81 available if the owner or annuitant has not reached age 76 on the Policy Date. Charges are lower if you do not choose an optional Guaranteed Minimum Death Benefit. After the Policy is issued, the death benefit option cannot be changed. The death benefit is paid first to a surviving owner, if any; it is paid to the beneficiary only if there is no surviving owner. 9. TAXES Earnings, if any, are generally not taxed until taken out. If you take money out of a nonqualified policy during the accumulation phase, earnings come out first for federal tax purposes, and are taxed as ordinary income. If you are younger than 59½ when you take money out, you may incur a 10% federal

8 penalty tax on the taxable earnings. For nonqualified and certain qualified policies, payments during the income phase may be considered partly a return of your original investment so that part of each payment may not be taxable as income. For qualified policies, payments during the income phase are, in many cases, considered as all taxable income. 10. ADDITIONAL FEATURES This Policy has additional features that might interest you. These features may not be suitable for your particular situation. These include the following: You can arrange to have money automatically sent to you monthly, quarterly, semi-annually or annually while your Policy is in the Accumulation Phase. This feature is referred to as the Systematic Payout Option. Amounts you receive may be included in your gross income, and in certain circumstances, may be subject to penalty taxes. We will, upon your request, automatically transfer amounts among the subaccounts on a regular basis to maintain a desired allocation of the Policy Value among the various subaccounts. This feature is called Asset Rebalancing. You can arrange to have a certain amount of money (at least $500) automatically transferred from the Federated Prime Money Fund II Subaccount either monthly or quarterly, into your choice of Subaccounts. This feature is called Dollar Cost Averaging. 11. OTHER INFORMATION Right to Cancel Period The Policy provides for a Right to Cancel Period of 20 days plus a 5-day period to allow for mail delivery. The amount of the refund will generally be the Policy Value. No fees or charges will be deducted from the Policy Value (except separate account charges that are included in the Policy Value calculation.) You bear the risk of any decline in Policy Value during the Right to Cancel Period. To cancel your investment, please return your Policy to us or to the advisor from whom you purchased the Policy. A returned Policy will be deemed void. Section 1035 Exchanges Before exchanging one annuity for another under Section 1035 of the Internal Revenue Code ( 1035 Exchange ), you should compare both annuities carefully. If you exchange an annuity contract for the Policy described in this prospectus, you might have to pay a surrender charge and tax, including a penalty tax, on your old annuity contract; then, other fees and charges may be higher (or lower) under this Policy, and the benefits under this Policy may be different. You should not exchange another annuity contract for this Policy unless you determine, after knowing all of the facts, that the change is in your best interest and not just better for the person trying to sell you this Policy. If you decide to purchase this Policy through a 1035 Exchange, you should speak to your financial professional or tax advisor to make sure that the transaction will be tax free. If you surrender your old annuity contract for cash and then buy a new annuity contract, for example, you may have to pay tax on the surrender. Transamerica Financial Life Insurance Company Transamerica Financial Life Insurance Company is a life insurance company incorporated under New York law. It is principally engaged in offering life insurance and annuity policies. TFLIC Separate Account VNY The Separate Account is a unit investment trust registered with the SEC and operating under New York law. The Separate Account has various Subaccounts dedicated to the Policy, each of which invests solely in a corresponding Portfolio. Condensed Financial Information Please note that Appendix B contains a history of accumulation unit values in a table labeled Condensed Financial Information. Other Topics Additional information on the topics summarized above and on other topics not summarized here can be found at Other Information. 12. INQUIRIES AND POLICY AND POLICYHOLDER INFORMATION If you need more information about the Advisor s Edge SM NY Variable Annuity or want to make a transaction, then call or write to our Administrative Office at: Transamerica Financial Life Insurance Company Administrative Office Attention: Customer Care Group 4333 Edgewood Road, N.E. Cedar Rapids, Iowa

9 You may check your policy at Follow the logon procedures. We cannot guarantee that you will be able to access this site. You should protect your logon information, because on-line (or telephone) options may be available and could be made by anyone who knows your logon information. We may not be able to verify that the person providing instructions using your logon information is you or someone authorized by you. 8

10 FEE TABLE (1) The following table describes the fees and expenses that you will pay when buying, owning and surrendering the Policy. The first table describes the fees and expenses that you will pay at the time you buy the Policy, surrender the Policy, or transfer Cash Value between investment choices. For a complete discussion of Policy costs and expenses, see Section 5, Expenses. Policy Owner Transaction Expenses Sales Load Imposed on Premiums None Contingent Deferred Sales Load (surrender charge) None Transfer Fees (2) $10 Special Service Fee (3) $0 - $25 (1) The fee table applies only to the accumulation phase and reflects the maximum charges unless otherwise noted. During the income phase, the fees may be different than those described in the fee table. See Section 5, Expenses. (2) TFLIC does not currently charge a fee for transfers among the Subaccounts, although it reserves the right to charge a $10 fee for each Transfer in excess of 12 per Policy Year. (3) We may deduct a charge for special services, including overnight delivery, duplicate policies; non-sufficient checks on new business; duplicate 1099 and 5498 tax forms; duplicate disclosure documents and semi-annual reports; check copies; printing and mailing previously submitted forms; and asset verification requests from mortgage companies. In addition, we may consider as special services customer initiated changes, modifications and transactions which are submitted in such a manner as to require the Company to incur additional processing costs. The following table describes the fees and expenses that you will pay periodically during the time that you own the Policy, not including Portfolio fees and expenses. Annual Policy Service Charge $0 - $30 Separate Account Annual Expenses (as a percentage of assets in the Separate Account) Base Separate Account Expenses: Mortality and Expense Risk Fee 0.40% Administrative Charge 0.15% Total Base Separate Account Annual Expenses 0.55% Optional Separate Account Annual Expenses: Annual Step-Up to Age 81 Death Benefit 0.20% Return of Premium Death Benefit 0.05% Total Separate Account Annual Expenses with Highest Optional Separate Account Expenses (1) 0.75% Optional Rider Fees No Longer Available for New Sales Architect Guaranteed Lifetime Withdrawal Benefit (2) Single Life Option Joint Life Option 50% Maximum Equity Percentage 0.30% 0.45% 60% Maximum Equity Percentage 0.45% 0.65% 70% Maximum Equity Percentage 0.65% 1.00% (1) (2) Total Separate Account Annual Expenses reflect the base separate account expenses plus the Annual Step-Up to Age 81 Death Benefit. The fee is a percentage of the total withdrawal base. The total withdrawal base on the rider date is the policy value. After the rider date, the total withdrawal base is equal to the total withdrawal base on the rider date, plus subsequent premium payments, less subsequent total withdrawal base adjustments. See Appendix D. The next item shows the lowest and highest total operating expenses charged by the portfolio companies for the year ended December 31, 2012 (before any fee waiver or expense reimbursements). Expenses may be higher or lower in future years. More detail concerning each Portfolio s fees and expenses is contained in the prospectus for each Portfolio. 9

11 Total Portfolio Annual Operating Expenses (1) Lowest Highest Expenses that are deducted from portfolio assets, including management fees, distribution and/or service 12b-1 fees, and other expenses. 0.17% 2.25% (1) The fee table information relating to the Portfolios is for the year ending December 31, 2012 (unless otherwise noted) and was provided to TFLIC by the underlying funds, their investment advisors or managers, and TFLIC has not and cannot independently verify the accuracy or completeness of such information. Actual future expenses of the Portfolios may be greater or less than those shown in the Table. Gross expense figures do not reflect any fee waivers or expense reimbursements. Actual expenses may have been lower than those shown in the Table. EXAMPLE (1) The following examples are intended to help you compare the cost of investing in the Policy with the cost of investing in other variable annuity policies. These costs include Policy Owner transaction expenses, Policy fees, Separate Account annual expenses, and Portfolio fees and expenses. The following example illustrates the highest fees and expenses of any of the Portfolios for the year ended December 31, 2012, and the highest combination of Separate Account expenses that you would incur on a $10,000 Premium Payment over various periods and assuming (1) a 5% annual rate of return; and (2) the Architect Guaranteed Lifetime Withdrawal Benefit rider (which is no longer available for new sales) has been selected. As noted in the Fee Table, the Policy imposes no surrender or withdrawal charges of any kind. Your expenses are identical whether you continue the Policy or withdraw the entire value of your Policy at the end of the applicable period as a lump sum or under one of the Policy s Annuity Payment Options. The expenses reflect different mortality and expense risk fees depending on which death benefit you select: 1 Year 3 Years 5 Years 10 Years Annual Step-Up to Age 81 Death Benefit Option (0.75%) $406 $1,227 $2,061 $4,201 Return of Premium Death Benefit Option (0.60%) $391 $1,183 $1,989 $4,067 Policy Value Death Benefit Option (0.55%) $386 $1,169 $1,965 $4,021 The following example illustrates the highest fees and expenses of any of the Portfolios for the year ended December 31, 2012, and the highest combination of Separate Account expenses that you would incur on a $10,000 Premium Payment over various periods and assuming a 5% annual rate of return. As noted in the Fee Table, the Policy imposes no surrender or withdrawal charges of any kind. Your expenses are identical whether you continue the Policy or withdraw the entire value of your Policy at the end of the applicable period as a lump sum or under one of the Policy s Annuity Payment Options. The expenses reflect different mortality and expense risk fees depending on which death benefit you select: 1 Year 3 Years 5 Years 10 Years Annual Step-Up to Age 81 Death Benefit Option (0.75%) $306 $936 $1,592 $3,347 Return of Premium Death Benefit Option (0.60%) $291 $892 $1,519 $3,205 Policy Value Death Benefit Option (0.55%) $286 $877 $1,494 $3,158 (1) Different fees and expenses not reflected in the example may be assessed during the income phase of the Policy. You should not consider this example to be a representation of past or future expenses or performance. Actual expenses may be higher than those shown, subject to the guarantees in the Policy. In addition, your rate of return may be more or less than the 5% assumed in the example. For information concerning compensation paid for sale of the Policies, see Distribution of the Policies. 10

12 1. THE ANNUITY POLICY The Advisor s Edge SM NY variable annuity is a flexible-premium variable annuity offered by TFLIC. The Policy provides a means of investing on a taxdeferred basis in various Portfolios. Who Should Invest The Policy is intended for long-term investors who want tax-deferred accumulation of funds, generally for retirement but also for other long-term investment purposes. The tax-deferred feature of the Policy is most attractive to investors in high federal and state marginal tax brackets who have exhausted other avenues of tax deferral, such as pre-tax contributions to employer-sponsored retirement or savings plans. There is no additional tax deferral benefit when the Policy is purchased to fund a qualified plan. Do not purchase this Policy if you plan to use it, or any of its riders, for resale, speculation, arbitrage, viatication, or any other type of collective investment scheme. Your Policy is not intended or designed to be traded on any stock exchange or secondary market. By purchasing this Policy, you represent and warrant that you are not using the Policy, or any of its riders for resale, speculation, arbitrage, viatication, or any other type of collective investment scheme. About the Policy The Advisor s Edge SM NY variable annuity is a contract between you, the Policy Owner, and TFLIC, the issuer of the Policy. The Policy provides benefits in two distinct phases: accumulation and income. Accumulation Phase The Accumulation Phase starts when you purchase your Policy and ends immediately before the Annuity Commencement Date, when the Income Phase starts. During the Accumulation Phase, you choose to allocate your investment in the Policy among the various available Portfolios. The Policy is a variable annuity because the value of your investment in the Subaccounts can go up or down depending on the investment performance of the Subaccounts you choose. You could lose the amount that you allocate to the Subaccounts. The Policy is a flexible-premium annuity because after you purchase it, you can make additional investments of at least $500 until the Income Phase begins; you are not required to make 11 any additional investments. During this phase, you are generally not taxed on earnings from amounts invested unless you make withdrawals. Other benefits available during the Accumulation Phase include the ability to: Make transfers among your investment choices without current tax consequences. (See Transfers Among the Subaccounts) Withdraw all or part of your money with no surrender penalty charged by TFLIC, although you may incur income taxes and a 10% penalty tax. (See ACCESS TO YOUR MONEY - Full and Partial Withdrawals.) Income Phase During the Income Phase, you receive regular annuity payments. The amount of these payments is based in part on the amount of money accumulated under your Policy and the Annuity Payment Option you select. The Annuity Payment Options are explained at Annuity Payments. At your election, payments can be either variable or fixed. If variable, the payments rise or fall depending on the investment performance of the Subaccounts you choose. If fixed, the payment amounts are guaranteed. Annuity payments are available in a wide variety of options, including payments over a specified period or for life (for either a single life or joint lives), with or without a guaranteed number of payments. The Separate Account When you purchase a Policy, money you have allocated to the Subaccounts is deposited into TFLIC Separate Account VNY. The Separate Account contains a number of Subaccounts that invest exclusively in shares of the corresponding Portfolios. The investment performance of each Subaccount is linked directly to the investment performance of one of the Portfolios. Assets in the Separate Account belong to TFLIC but are accounted for separately from TFLIC s other assets and can be used only to satisfy its obligations to Policy Owners. 2. PURCHASE Customer Order Form and Issuance of Policies To invest in the Advisor s Edge SM NY variable annuity, you should send a completed customer order form and your initial Premium Payment to the

13 address indicated on the customer order form. If you wish to make a personal delivery by hand or courier to TFLIC of your completed customer order form and initial Premium Payment (rather than through the mail), do so at our Administrative Office, 4333 Edgewood Road, N.E., Cedar Rapids, Iowa TFLIC will issue a Policy only if the Annuitant and Joint Annuitant are 85 years of age or younger. If the customer order form and any other required documents are received in good order, TFLIC will issue the Policy and will credit the initial Premium Payment within two Business Days after receipt. (A Business Day is any day that the New York Stock Exchange is open for regular trading.) Along with the Policy, TFLIC will also send a Policy acknowledgment form, which you should complete, sign, and return in accordance with its instructions. If TFLIC cannot credit the initial Premium Payment because the customer order form or other required documentation is incomplete, TFLIC will contact the applicant in writing, explain the reason for the delay, and refund the initial Premium Payment within five Business Days unless the applicant consents to TFLIC s retaining the initial Premium Payment and crediting it as soon as the necessary requirements are fulfilled. DEFINITION Qualified Policy In addition to Non-Qualified Policies, TFLIC also offers the Advisor s Edge SM NY as a Qualified Policy. Note that Qualified Policies contain certain other restrictive provisions limiting the timing of payments to and distributions from the Qualified Policy When the term Qualified Policy is used in this prospectus we mean a Policy that qualifies as a tax sheltered annuity or an individual retirement annuity under Section 403(b), 408(b), or 408A of the Internal Revenue Code. Pursuant to new tax regulations, starting January 1, 2009 the policy is not available for purchase under a 403(b) plan and we do not accept additional premiums or transfers to existing 403(b) policies. Premium Payments A Premium Payment is any amount you use to buy or add to the Policy. A Premium Payment may be reduced by any applicable premium tax. In that case, the resulting amount is called a net Premium 12 Payment. The initial net Premium Payment is credited to the Policy within two Business Days of receipt (in good order) of the Premium Payment, customer order form and other required documents. A Few Things to Keep in Mind Regarding Premium Payments The minimum initial Premium Payment for a Non-Qualified Policy is $10,000. The minimum initial Premium Payment for a Qualified Policy is $1,000. You must obtain prior company approval to purchase a policy with an amount less than the stated minimum. We do not accept cash. We reserve the right to not accept third party checks. A third party check is a check that is made payable to one person who endorses it and offers it as payment to a second person. Checks should normally be payable to Transamerica Financial Life Insurance Company, however, in some circumstances, at our discretion we may accept third party checks that are from rollovers or transfers from other financial institutions. Any third party checks not accepted by TFLIC will be returned. We reserve the right to reject or accept any form of payment. Any unacceptable forms of payment will be returned. You may make additional Premium Payments at any time during the Accumulation Phase and while the Annuitant or Joint Annuitant, if applicable, is living. Additional Premium Payments must be at least $500 for Non- Qualified Policies. Additional Premium Payments must be at least $25 for Qualified Policies. Additional Premium Payments received (in good order) before the close of the New York Stock Exchange (usually 4:00 p.m. Eastern time) are credited to the Policy as of the close of business that same day. For issue ages 0 80, we reserve the right to reject cumulative Premium Payments over $1,000,000 (if riders are attached) and $2,000,000 (if riders are not attached) (this includes subsequent Premium Payments) for policies with the same Owner or same Annuitant issued by us or an affiliate. For issue ages over 80, we reserve the right to reject cumulative Premium Payments over $500,000 (if riders are attached) and $1,000,000 (if riders are not attached) (this includes subsequent Premium Payments) for Policies with the same Owner or same Annuitant issued by us or an affiliate.

14 Your initial net Premium Payment will be invested on the Policy Date among the Subaccounts selected in your customer order form. See Allocation of Premium Payments, below, for more information. plus any additional net Premium Payments credited any increase in the Policy Value attributable to investment results of the Subaccount(s) you selected The date on which the Policy is issued is called the Policy Date. A Policy Anniversary is any anniversary of the Policy Date. A Policy Year is a period of twelve months starting with the Policy Date or any Policy Anniversary. There may be delays in our receipt of applications that are outside of our control. Any such delays will affect when your Policy can be issued and your Premium Payment(s) allocated among your investment choices. Purchasing by Wire For wiring instructions, please contact our Administrative Office at Allocation of Premium Payments You specify on the customer order form what portion of your Premium Payments you want to be allocated among which Subaccounts. You may allocate your Premium Payments to one or more Subaccounts. All allocations you make to the Subaccounts must be in whole-number percentages totaling 100%. TFLIC reserves the right to refuse any Premium Payment. Should your investment goals change, you may change the allocation percentages for additional net Premium Payments by sending written notice to TFLIC. Requests for Transfers received in good order before the close of the New York Stock Exchange (generally 4:00 p.m. Eastern time) are processed as of that day. Requests received after the close of the New York Stock Exchange are processed the next Business Day. What s My Policy Worth Today? Policy Value The Policy Value of your Policy is the value of all amounts accumulated under the Policy during the Accumulation Phase (similar to the current market value of a mutual fund account). When the Policy is opened, the Policy Value is equal to your initial net Premium Payment. On any Business Day thereafter, the Policy Value equals the Policy Value from the previous Business Day, minus any decrease in the Policy Value attributable to investment results of the Subaccount(s) you selected the daily Mortality and Expense Risk Fee the daily Administrative Expense Charge the Annual Policy Service Charge, if applicable any withdrawals any charges for Transfers made after the first twelve in a Policy Year any Premium Taxes, if applicable, that occur during the Valuation Period. (The Cash Value, which is what you receive if you fully withdraw (i.e., surrender) your Policy, is the Policy Value minus certain fees and charges.) The Valuation Period is any period between two successive Business Days beginning at the close of business of the first Business Day (generally 4:00 p.m Eastern time) and ending at the close of business of the next Business Day. You should expect the Policy Value of your Policy to change from Valuation Period to Valuation Period, reflecting the investment experience of the Subaccounts you have selected as well as the daily deduction of charges. An Accumulation Unit is a measure of your ownership interest in the Policy during the Accumulation Phase. When you allocate your net Premium Payments to a selected Subaccount, TFLIC will credit a certain number of Accumulation Units to your Policy. TFLIC determines the number of Accumulation Units it credits by dividing the dollar amount you have allocated to a Subaccount by the Accumulation Unit Value for that Subaccount as of the end of the Valuation Period in which the payment is credited. Each Subaccount has its own Accumulation Unit Value (similar to the share price (net asset value) of a mutual fund). The Accumulation Unit Value varies each Valuation Period with the net rate of return of the Subaccount. The net rate of return reflects the performance of the Subaccount for the Valuation Period and is net of asset charges to the Subaccount. The Policy Value in each Subaccount equals the number of Accumulation 13

15 Units in the Subaccount multiplied by the Accumulation Unit Value for that Subaccount. All dividends and capital gains earned will be reinvested and reflected in the Accumulation Unit Value. 3. INVESTMENT CHOICES The Advisor s Edge SM NY variable annuity offers you a means of investing in various Portfolios offered by different investment companies (by investing in corresponding subaccounts). The companies that provide investment advice and administrative services for the Portfolios offered through this Policy are listed in Appendix A: Portfolios Associated with the Subaccounts. There is no assurance that a Portfolio will achieve its stated objective. The general public may invest in the Portfolios only through certain insurance policies and qualified plans. The investment objectives and policies of the Portfolios may be similar to those of certain publicly available funds or portfolios. However, you should not expect that the investment results of the Portfolios will be comparable to those of any publicly available funds or portfolios. Additional information regarding the investment objectives and policies of the Portfolios and the investment advisory services, total expenses, and charges can be found in the current prospectuses for the corresponding Portfolios. You should read the prospectuses for the Portfolios carefully before you invest. You should not expect the investment results of the Portfolios to be the same as those of publicly available funds and portfolios. Note: If you received a summary prospectus for any of the Portfolios, please follow the instructions on the first page of the summary prospectus to obtain a copy of the full fund prospectus. You can obtain prospectuses for the Portfolios by calling or writing to our Administrative Office. Selection of Portfolios The Portfolios offered through this product are selected by TFLIC, and TFLIC may consider various factors, including, but not limited to, asset class coverage, the strength of the adviser s or subadviser s reputation and tenure, brand recognition, performance, and the capability and qualification of each investment firm. Another factor that we may 14 consider is whether the Portfolio or its service providers (e.g., the investment adviser or subadvisers) or its affiliates will make payments to us or our affiliates. For additional information about these arrangements, see Revenue We Receive. We review the portfolios periodically and may remove a portfolio, or limit its availability to new premiums and/or transfers of cash value if we determine that a portfolio no longer satisfies one or more of the selection criteria, and/or if the portfolio has not attracted significant allocations from owners. We have included the Transamerica Series Trust ( TST ) portfolios at least in part because they are managed by one of our affiliates, Transamerica Asset Management, Inc. ( TAM ). You are responsible for choosing the Portfolios, and the amounts allocated to each, that are appropriate for your own individual circumstances and your investment goals, financial situation, and risk tolerance. Because you bear the investment risk, you should carefully consider decisions you make regarding your investment allocations. Note: Certain Portfolios have similar names. It is important that you state or write the full name of the Portfolio to which you wish to direct your allocation when you submit an allocation request. Failure to do so may result in a delay of a requested allocation amount being credited to the Subaccount. In making your investment selections, we encourage you to thoroughly investigate all of the information regarding the portfolios that are available to you, including each Portfolio s prospectus, statement of additional information and annual and semi/annual reports. Other sources such as a Fund s website or newspapers and financial and other magazines provide more current information, including information about any regulatory actions or investigations relating to a Fund or Portfolio. After you select Portfolios for your initial premium, you should monitor and periodically re-evaluate your allocations to determine if they are still appropriate. You bear the risk of any decline in the value of your Policy resulting from the performance of the Portfolios you have chosen. We do not recommend or endorse any particular Portfolio and we do not provide investment advice. We do not guarantee that any Subaccounts will always be available for Premium Payments, allocations, or transfers.

16 We also reserve the right to limit the number of Subaccounts you are invested in at any one time. Addition, Deletion or Substitution of Investments TFLIC cannot and does not guarantee that any of the subaccounts will always be available for Premium Payments, allocations or transfers. TFLIC retains the right, subject to any applicable law, to make certain changes in the separate account and its investments. TFLIC reserves the right to eliminate the shares of any portfolio held by a subaccount and to substitute shares of another portfolio of the underlying funds, or of another registered open-end management investment company for the shares of any portfolio, if the shares of the portfolio are no longer available for investment or if, in the judgment of TFLIC, investment in any portfolio would be inappropriate in view of the purposes of the separate account. To the extent required by the 1940 Act, as amended, substitutions of shares attributable to your interest in a subaccount will not be made without prior notice to you and the prior approval of the Securities and Exchange Commission ( SEC ). Nothing contained herein shall prevent the separate account from purchasing other securities for other series or classes of variable annuities, or from affecting an exchange between series or classes of variable annuities on the basis of your requests. New subaccounts may be established when, in the sole discretion of TFLIC, marketing, tax, investment or other conditions warrant. Any new subaccounts may be made available to existing owners on a basis to be determined by TFLIC. Each additional subaccount will purchase shares in a mutual fund portfolio or other investment vehicle. TFLIC may also eliminate one or more subaccounts if, in its sole discretion, marketing, tax, investment or other conditions warrant such change. In the event any subaccount is eliminated, TFLIC will notify you and request reallocation of the amounts invested in the eliminated subaccount. Similarly, TFLIC may, at its discretion, close a subaccount to new investment (either transfers or Premium Payments). If you allocate Premium Payments to a subaccount that is closed to new investment, we will require new instructions. If we do not receive new instructions, the requested transaction will be canceled and the Premium Payment will be returned. In the event of any such substitution or change, TFLIC may, by appropriate endorsement, make such 15 changes in the policy as may be necessary or appropriate to reflect such substitution or change. Furthermore, if deemed to be in the best interests of persons having voting rights under the policies, the separate account may be (i) operated as a management company under the 1940 Act or any other form permitted by law, (ii) deregistered under the 1940 Act in the event such registration is no longer required or (iii) combined with one or more other separate accounts. To the extent permitted by applicable law, TFLIC also may (i) transfer the assets of the separate account associated with the policies to another account or accounts, (ii) restrict or eliminate any voting rights of owners or other persons who have voting rights as to the separate account, (iii) create new separate accounts, (iv) add new subaccounts to or remove existing subaccounts from the separate account, or combine subaccounts, or (v) add new underlying fund portfolios, or substitute a new fund for an existing fund. Transfers Among the Subaccounts Should your investment goals change, you may make transfers of money among the Subaccounts, subject to limitations described above which we reserve the right to impose, and the following conditions: You may make requests for transfers in writing. TFLIC will process requests it receives in good order before the close of the New York Stock Exchange (generally 4:00 p.m. Eastern time) at the close of business that same day. Requests received after the close of the New York Stock Exchange are processed the next Business Day. The minimum amount you may transfer from a Subaccount is $500 (unless the Policy Value in a Subaccount is less than $500). TFLIC does not currently charge a fee for transfers among the Subaccounts, although it reserves the right to charge a $10 fee for Transfers in excess of 12 per Policy Year. There are no transfers permitted out of the Dollar Cost Averaging Option except through the Dollar Cost Averaging Program. Market Timing and Disruptive Trading Statement of Policy. This variable insurance product was not designed for the use of market timers, frequent or disruptive traders (frequent transfers are considered to be disruptive). Such transfers may be harmful to the underlying fund portfolios and increase transaction costs.

17 Market timing and disruptive trading among the subaccounts can cause risks with adverse effects for other policy owners (and beneficiaries and underlying fund portfolios). These risks and harmful effects include: (1) dilution of the interests of long-term investors in a subaccount if purchases or transfers into or out of an underlying fund portfolio are made at prices that do not reflect an accurate value for the underlying fund portfolio s investments (some market timers attempt to do this through methods known as time-zone arbitrage and liquidity arbitrage ); (2) an adverse effect on portfolio management, such as: (a) impeding a portfolio manager s ability to sustain an investment objective; (b) causing the underlying fund portfolio to maintain a higher level of cash than would otherwise be the case; or (c) causing an underlying fund portfolio to liquidate investments prematurely (or otherwise at an inopportune time) in order to pay withdrawals or transfers out of the underlying fund portfolio; and (3) increased brokerage and administrative expenses. These costs are borne by all policy owners invested in those subaccounts, not just those making the transfers. We have developed policies and procedures with respect to market timing and disruptive trading (which vary for certain subaccounts at the request of the corresponding underlying fund portfolios) and we do not make special arrangements or grant exceptions to accommodate market timing or disruptive trading. As discussed herein, we cannot detect or deter all market timing or potentially disruptive trading. Do not invest with us if you intend to conduct market timing or potentially disruptive trading. Detection. We employ various means in an attempt to detect and deter market timing and disruptive trading. However, despite our monitoring we may not be able to detect nor halt all harmful trading. In addition, because other insurance companies (and retirement plans) with different policies and procedures may invest in the underlying fund portfolios, we cannot guarantee that all harmful trading will be detected or that an underlying fund portfolio will not suffer harm from market timing or 16 disruptive trading among subaccounts of variable products issued by these other insurance companies or retirement plans. Deterrence. If we determine you are engaged in market timing or disruptive trading, we may take one or more actions in an attempt to halt such trading. Your ability to make transfers is subject to modification or restriction if we determine, in our sole opinion, that your exercise of the transfer privilege may disadvantage or potentially harm the rights or interests of other policy owners (or others having an interest in the variable insurance products). As described below, restrictions may take various forms, but under our current policies and procedures will include loss of expedited transfer privileges. We consider transfers by telephone, fax, overnight mail, or the Internet to be expedited transfers. This means that we would accept only written transfer requests with an original signature transmitted to us only by U.S. mail. We may also restrict the transfer privileges of others acting on your behalf, including your registered representative or an asset allocation or investment advisory service. We reserve the right to reject any premium payment or transfer request from any person without prior notice, if, in our judgment, (1) the payment or transfer, or series of transfers, would have a negative impact on an underlying fund portfolio's operations, or (2) if an underlying fund portfolio would reject or has rejected our purchase order or has instructed us not to allow that purchase or transfer, or (3) because of a history of market timing or disruptive trading. We may impose other restrictions on transfers, or even prohibit transfers for any owner who, in our view, has abused, or appears likely to abuse, the transfer privilege on a case-by-case basis. We may, at any time and without prior notice, discontinue transfer privileges, modify our procedures, impose holding period requirements or limit the number, size, frequency, manner, or timing of transfers we permit. Because determining whether to impose any such special restrictions depends on our judgment and discretion, it is possible that some policy owners could engage in disruptive trading that is not permitted for others. We also reserve the right to reverse a potentially harmful transfer if an underlying fund portfolio refuses or reverses our order; in such instances some policy owners may be treated differently than others in that some transfers may be reversed and others allowed. For all of these purposes, we may aggregate two or more variable insurance products that we believe are connected. If you engage a third party investment advisor for asset allocation services, then you may be subject to these